Update 7/29/2022: The AVMA continues to decline to take any position on Petplan’s action, as does the pet insurance industry’s main trade association, NAPHIA (the North American Pet Health Insurance Association). Only one insurance company, Trupanion, has commented for this story to date. TCR continues to press individual insurance industry stakeholders for comment as well as AVMA leaders. More reporting to come.
This story has been updated to reflect that the AVMA provided a comment shortly following publication.
Last Friday, we reported that pet health insurer Petplan — now rebranded as “Fetch by the Dodo” to reflect its new partnership with The Dodo, the animal-loving viral video blog – had started rolling out an exclusion in its policy that slashes coverage options for veterinary professionals. Now we can report that the insurer explained the move by declaring veterinary professionals a “moral hazard/fraud [risk]” in the cover letter of the filing we reported last week.
“We are filing an exclusionary endorsement designed to eliminate moral hazard/fraud from the treatment of the policyholder’s pet,” the filing said.
NAIC Consumer Liason Calls on Regulators to Reject Petplan Filing
The language in the cover letter declaring veterinary professionals a “moral hazard” was brought to our attention by Center for Economic Justice (CEJ)’s Birny Birnbaum, the consumer liaison appointed by the National Association of Insurance Commissioners (NAIC), who sits on the Pet Insurance Working Group. Birnbaum has called on Illinois and Virginia to reject Petplan’s filings.
I write regarding the proposed exclusion by PetPlan of coverage for policyholders who are veterinarians or employed or related to a veterinarian, attached.
The cover letter states the reason for the exclusion is preventing moral hazard/fraud.
We ask you to reject this exclusion for two reasons. First, there is no showing that veterinarians, their family members or employees are more likely to commit fraud or present a moral hazard to the insurer. While veterinarians may be more familiar with pet insurance policies than most, an educated policyholder is certainly no basis for excluding coverage for that policyholder. Absent some evidence in support of singling out this group of potential insureds, the exclusion is arbitrary.
Second, an exclusion for an entire class of policyholders is improper. Even if there was some basis for excluding coverage for a particular type of risk, the appropriate method would be an underwriting guideline that prohibits coverage. With the approach taken by PetPlan, a policy can be sold that offers no coverage, which would be an unfair and deceptive act.
Thanks for your consideration.
The cover letter from Petplan’s underwriter is below:
Apparently it is NOT counter to Virginia public policy or the public interest to arbitrarily limit the providers a pet insurance policyholder may use,” Mr. Birnbaum told TCR, reflecting on the response he received from a Virginia insurance regulator.
Phyllis Oates, a Virginia insurance regulator who says she reviews pet insurance filings, responded to Mr. Birnbaum by acknowledging, “this exclusion may limit an individual’s right to choose a veterinarian that is a relative or an employer of the insured” only to conclude, however, that “The Bureau” does not have statutory authority to approve or disapprove the filing. “Apparently, it is NOT counter to Virginia public policy or public interest to arbitrarily limit the providers a pet insurance policyholder may use,” Mr. Birnbaum told TCR, reflecting on the Virginia response.
As for the pet insurance industry’s trade association, the North American Pet Health Insurance Association (NAPHIA), the organization is staying out of the debate. Its executive director, Richard Faucher issued this statement to TCR:
“NAPHIA does not govern, prescribe, nor comment on any member company’s particular product filing in whole or part, nor takes a stance on any given member company’s risk tolerance in the underwriting of its products. Regulators in each state determine the appropriateness of any pet insurance product filing with respect to that given state’s regulations. NAPHIA continues to support a pet insurance marketplace that fosters stable, robust and innovative pet insurance products that serve a wide and varied set of consumers and their pet’s needs. NAPHIA continues to work with the NAIC and regulators on the advancement of standards via a model law for pet insurance. A model law is not intended to thwart innovation of products for a changing consumer needs landscape and the risk perils that may present over time.”
Trupanion President Margi Tooth, speaking briefly by phone, said Trupanion, a major competitor of Petplan, has “no alignment” with Petplan’s cover letter language declaring veterinary professionals a “moral hazard.” However, no other pet health insurance providers would take positions as of press time when asked by email if they were comfortable with the “moral hazard” cover letter.
Note: As always, TCR will update our reporting expeditiously should any insurance industry official(s) choose to comment.
Update: AVMA seeks meeting with Fetch/Dodo/Petplan
And the American Veterinary Medical Association (AVMA) did not respond to email or phone calls seeking comment as of press time.
Shortly following publication, Lisa Howard, a spokeswoman for the AVMA, wrote: “We’ve requested to meet with Fetch The Dodo and are awaiting a response from them.”
Media Elites Remain Silent
Once again, Isabel Lerer, a former PETA board member who founded The Dodo, a blog that caters to animal lovers, would not respond to requests for comment sent to her personal email address, including whether The Dodo was comfortable with the cover letter language. Ms. Lerer’s brother, Benjamin Lerer, who co-founded Thrillst and helped engineer Petplan’s partnership with The Dodo according to Petplan CEO Paul Guyardo, also would not comment, nor would Dodo parent company CEO Jim Bankoff of Vox Media, Inc.